The smartphone market is abuzz with excitement as Apple’s latest iPhone models, equipped with generative artificial intelligence capabilities, are generating significant demand. Despite the delayed delivery times, analysts predict a strong sales performance, with some expecting up to 90 million units to be sold in 2024. This surge in demand is attributed to the growing market for AI-powered smartphones, which is projected to experience a compound annual growth rate of 78% through 2028.
One company poised to benefit from Apple’s success is Qorvo, a leading supplier of radio frequency chips used in iPhones and iPads. With 46% of its revenue coming from Apple, Qorvo’s fortunes are closely tied to the tech giant’s performance. As Apple’s sales soar, Qorvo is expected to reap the rewards, potentially increasing its chip content per unit and boosting revenue.
Qorvo’s recent fiscal first-quarter results were impressive, with a 36% year-over-year revenue increase to $887 million. The company’s acquisition of Anokiwave, which provides signal reception technology used in Apple’s latest iPhones, has also given its financial performance a significant boost. As a result, Qorvo’s margin improvement is expected to continue, driving healthy growth in earnings over the next couple of years.
With its stock currently trading at a discount to the U.S. technology sector’s average earnings multiple, Qorvo presents an attractive investment opportunity. Analysts predict the company’s bottom line could increase at an annual rate of 28% in the next two fiscal years, potentially sending its stock price soaring by nearly 50% from current levels. As the demand for AI-powered smartphones continues to grow, Qorvo is well-positioned to ride the wave of success, making it an undervalued semiconductor stock worth considering.
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